Sunnyvale, Calif.—Microsoft Corp. on Friday sent a letter to the Yahoo board of directors with a deadline for coming to an acquisition agreement within the next three weeks. The letter, signed by Microsoft CEO Steve Ballmer, stated if there is no agreement in that timeframe, “we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board.”

On Monday, Yahoo shot back with a letter from CEO Jerry Yang and Chairman Roy Bostock reiterating that the $44.6 billion Microsoft bid undervalues Yahoo and that it is not opposed to a transaction that properly values the company. It also accuses Microsoft of mischaracterizing the nature of discussions that have transpired between the two companies.

“We have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interest of our stockholders,” the Yahoo executives wrote. “Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.”

In the midst of this wrangling, Yahoo on Monday announced its preview of AMP! from Yahoo, a new ad management platform that it says will simplify the process of buying and selling ads online.